The Securities Regulation Code and its Implementing Rules and Regulations

Rule 28

2 Compliance with Qualification Requirements of Self-Regulatory Organizations No Broker Dealer shall effect any transaction in or induce the purchase or sale of any security unless the employee of such Broker Dealer who effects or is involved in effecting such transaction is registered or approved in accordance with the standards of training, experience, competence, and other qualification standards (including, but not limited to, submitting and maintaining all required forms, paying all required fees, and passing the required examinations) established by the rules of any Exchange or other Self-Regulatory Organization where such Broker Dealer is a Participant. aHSTID

Rule 28

6 Registration of a salesman or of an associated person of a registered broker or dealer may be made upon written application filed with the Commission by such salesman or associated person. The application shall be separately signed and certified by the registered broker or dealer to which such salesman or associated person is to become affiliated, or by the issuer in the case of a salesman employed, appointed or authorized solely by such issuer. The application shall be in such form and contain such information and documents concerning the salesman or associated person as the Commission by rule shall prescribe. For purposes of this Section, a salesman shall not include any employee of an issuer whose compensation is not determined directly or indirectly on sales of securities of the issuer.

Rule 28

8 Within thirty (30) days after the filing of any application under this Section, the Commission shall by order: (a) Grant registration if it determines that the requirements of this Section and the qualifications for registration set forth in its rules and regulations have been satisfied; or (b) Deny said registration.

Rule 28

12 The registration of a salesman or associated person shall be automatically terminated upon the cessation of his affiliation with said registered broker or dealer, or with an issuer in the case of a salesman employed, appointed or authorized by such issuer. Promptly following any such cessation of affiliation, the registered broker or dealer, or issuer, as the case may be, shall file with the Commission a notice of separation of such salesman or associated person. 29.1. Procedure for Refusal, Suspension, Cancellation or Revocation of Registration The Commission may, upon its initiative, order or upon the complaint of any person, upon existence of any of the grounds provided for under Section 29 and/or Section 54 of the Code, refuse, suspend, cancel or revoke the registration of a broker-dealer, salesman or Associated Person in accordance with the 2006 Rules of Procedure of the Securities and Exchange Commission. 29.2. Protection of Customer Accounts Where Registration of a Broker Dealer is Suspended or Revoked If registration of a Broker Dealer is suspended or revoked the following procedure shall be observed: 29.2.1. If such Broker Dealer is an Exchange Trading Participant, the Exchange shall immediately arrange for another Exchange Trading Participant to take over any outstanding contracts relating to securities and simultaneously notify the Commission and the affected customers in writing of such transfer that said contracts have been transferred. 29.2.2. If such Broker Dealer is not an Exchange Trading Participant, the Commission shall notify the affected customers, if any, of such suspension or revocation and shall require the Exchange Trading Participant to which the Broker Dealer courses its trade to take over the operations of such Broker Dealer.

Rule 28

7 Applications filed pursuant to SRC Rules 28.5 and 28.6 shall be accompanied by a registration fee in such reasonable amount prescribed by the Commission.

Rule 28

9 The names and addresses of all persons approved for registration as brokers, dealers, associated persons or salesmen and all orders of the Commission with respect thereto shall be recorded in a Register of Securities Market Professionals kept in the office of the Commission which shall be open to public inspection.

Rule 28

5 Automatic Termination of Registration The registration of a salesman or associated person shall be automatically terminated upon the cessation of his affiliation with said registered broker or dealer or with an issuer in the case of a salesman employed, appointed or authorized by such issuer. Promptly following any such cessation of affiliation, the registered broker or dealer, issuer as the case may be, shall file with the Commission a notice of separation of such salesman or associated person.

Rule 28

11 Every person registered pursuant to SRC Rule 28.1 shall pay to the Commission an annual fee at such time and in such reasonable amount as the Commission shall prescribe. Upon notice by the Commission that such annual fee has not been paid as required, the Commission shall initiate a proceeding to suspend such person's registration. The registration of such person shall be suspended until payment has been made.

Rule 28

4 Suspension of Registration The Commission shall promulgate rules and regulations prescribing the qualifications for registration of each category of applicant, which shall, among other things, require as a condition for registration that: 28.4.1. If a natural person, the applicant satisfactorily pass a written examination as to his proficiency and knowledge in the area of activity for which registration is sought; 28.4.2. In the case of a broker or dealer, the applicant satisfy a minimum net capital as prescribed by the Commission, and provide a bond or other security as the Commission may prescribe to secure compliance with the provisions of this Code; and 28.4.3. If located outside of the Philippines, the applicant files a written consent to service of process upon the Commission pursuant to Section 65 hereof.

Rule 28

3 Action of the Commission on the Registration 28.3.1. Exemption from Registration and Compliance with Qualification Requirements The Commission, by rule or order, may conditionally or unconditionally exempt any broker, dealer, salesman, associated person of any broker or dealer, or any class of the foregoing, from the requirement of registration under SRC Rule 28.1 for purposes consistent with public interest and for the protection of investors. 28.3.2. Approval or Denial of Registration by the Commission The Commission shall, within thirty (30) days after the filing of any application under this Rule: (i) grant registrations if it determines that the requirements and qualifications for registrations set forth in this Rule have been satisfied; or (ii) deny said registration.

Rule 28

1 Registration of Brokers and Dealers 28.1.1. Broker Dealer A Broker Dealer is any entity that buys or sells securities for its own and customers' account and who shall be registered with the Commission pursuant to Section 28 of the Code. 28.1.2. Requirements for Registration 28.1.2.1. An entity applying for registration as a Broker Dealer under Section 28 shall indicate in the application form for registration, or in an amendment thereto, whether it will: 28.1.2.1.1. Act as a Broker or Dealer; 28.1.2.1.2. Trade, directly or indirectly, in an Exchange, in the Over-The-Counter Market or in an Alternative Trading System; 28.1.2.1.3. If an Exchange Trading Participant, act as a clearing or a non-clearing participant or as a market maker; 28.1.2.1.4. Deal with Equity Securities, Fixed Income/Debt Securities, Proprietary Shares, Non-Proprietary Shares, Government Securities, Derivatives or other instruments which must be specified in the application form. 28.1.2.2. "Market making transactions" shall mean transactions in a particular security/ies: 28.1.2.2.1. By a Broker Dealer which complies with the Commission and Exchange rules regarding its duty as a market maker; 28.1.2.2.2. To ensure two way quotes, provide liquidity, and maintain a fair and orderly trading market therein. 28.1.2.3. An applicant for registration as a Broker Dealer shall solely engage in the business of a Broker Dealer, unless otherwise authorized by the Commission to engage in another business. The Broker Dealer shall segregate the operational and financial books and records of the other businesses, if any. 28.1.2.4. Every application for registration as a Broker Dealer shall be filed on SEC Form 28-BD and be accompanied by the following papers or documents: 28.1.2.4.1. A continuing authorization for the Commission's duly authorized representative to verify the applicant's bank accounts. The authorization shall be for all banks wherein accounts are maintained by the Broker Dealer and shall be continuous with registration by the Commission; 28.1.2.4.2. Proof of compliance with paid up capital requirements pursuant to SRC Rule 28.1.2.5.2; 28.1.2.4.3. Certified True Copy of valid work permit of foreigners who are employees or officers of the applicant corporation duly issued by the Department of Labor and Employment (DOLE) or any appropriate agency; 28.1.2.4.4. Copies of identity cards/passports of the following: 28.1.2.4.4.1. Individual applicants (salesman/associated person); 28.1.2.4.4.2. Officers; 28.1.2.4.4.3. Directors; and 28.1.2.4.4.4. Persons who control more than ten percent (10%) of a class of voting securities of corporate applicants. 28.1.2.4.5. Written supervision and control procedures, including procedures for establishing and segregating transactions pursuant to Section 34.1 of the Code. Such procedures shall take into consideration the requirements of the Anti-Money Laundering Act of 2001 (RA 9160, as amended), and the Revised Code of Corporate Governance; 28.1.2.4.6. A schedule of minimum commission charges as required by SRC Rule 30.2.5; 28.1.2.4.7. Calculation of net capital requirements in accordance with SRC Rule 28.1.2.5.2 and SRC Rule 49.1.1.5 or any other financial ratio/measure which the Commission may in the future mandate; 28.1.2.4.8. Bio-data of Directors and Officers using SEC Form 28-BDF as well as Certified True Copy of educational, professional/technical or other academic qualifications of Officers, Associated Persons and Salesmen; 28.1.2.4.9. Latest audited financial statement; 28.1.2.4.10. Where applicant has been in existence for more than one year, certified copies of income tax returns for the two years preceding date of application; 28.1.2.4.11. Detailed description of Organizational and Functional charts, the names and designations of the officers, including branch offices; 28.1.2.4.12. If the applicant is a corporation, a certified copy of the following documents under oath, by the corporate secretary: 28.1.2.4.12.1. With respect to a foreign corporation, certificate that the board of directors has authorized, in a resolution, the President and Secretary to sign an irrevocable consent to service of process upon the Commission as service to the corporation; 28.1.2.4.12.2. Articles of Incorporation indicating that the purpose of the applicant is to engage in the business of a Broker Dealer; 28.1.2.4.12.3. Board resolution attesting to particulars contained in the application and in the attached documents. 28.1.2.4.13. Business plan regarding proposed and/or current operations, including projected volume of business. Such plan should reflect applicant's ability and plans to engage in a profitable level of business; and 28.1.2.4.14. A yearly schedule/timetable on the implementation of the training program for the staff, which specifies, among others, the description of the training program, date of implementation and name of participants. 28.1.2.4.15. Proof of valid membership in an SRO; 28.1.2.4.16. Risk Management Manual and Internal Control Procedures; 28.1.2.4.17. Business Continuity and Disaster Recovery Plan; 28.1.2.4.18. Comprehensive Information Technology Plan, to include among others: a) a list and brief description of the software and hardware to be primarily used in its functions and their location; b) a back-up system or subsystem and their location; c) security system and procedures to be employed; d) procedures to check sufficiency of system's capacity and expansion program, if necessary; and e) IT system maintenance schedule; and 28.1.2.4.19. Copies of proposed contract of any activities or services that are being outsourced. 28.1.2.5. Terms and Conditions for Registration and for Continuing Registration 28.1.2.5.1. Applicable to Exchange Trading Participants 28.1.2.5.1.1. Membership in good standing in an Exchange;provided, however that any applicant who is not a member of an Exchange may only be granted registration conditioned upon future membership in an Exchange; 28.1.2.5.1.2. Membership or participation in a Trust Fund accredited by the Commission under SRC Rule 36.5.1; 28.1.2.5.1.3. Where the Broker Dealer is a participant in a registered clearing agency, fulfillment of its obligation to contribute to the guarantee fund; 28.1.2.5.2. Applicable to both Exchange Trading Participants and Non-Exchange Broker Dealers 28.1.2.5.2(a). Compliance with SEC Risk Based Capital Adequacy (RBCA) Requirement/Ratio for Brokers Dealers, otherwise known as the RBCA Rules or any amendments thereto. 28.1.2.5.2(b).1. Unimpaired paid up capital of One Hundred Million pesos (PhP100,000,000.00) for the following types of Broker Dealers: 28.1.2.5.2(b).1.1. First time registrants who will be participating in a registered clearing agency upon the effectivity of the Code; 28.1.2.5.2(b).1.2. Those acquiring the business of existing Broker Dealer companies pursuant to SRC Rule 28.1.3 and will be participating in a registered clearing agency; Provided, however, that the Commission may authorize a lower capitalization for applicants not participating in a registered clearing agency. 28.1.2.5.2(b).2. Other existing Broker Dealer applicants not meeting the One Hundred Million (PhP100,000,000.00) capitalization and not seeking authorization to engage in market making transactions shall maintain a Thirty Million Pesos (PhP30,000,000.00) unimpaired paid up capital, or such other amount as the Commission may prescribe, and file the required surety bond in lieu of the One Hundred Million Pesos (PhP100,000,000.00) as prescribed under SRC Rule 28.1.6. 28.1.2.5.2(b).3. Unimpaired paid up capital of Two Million Five Hundred Thousand Pesos (PhP2,500,000.00), or such other amount as the Commission may prescribe, for applicants dealing purely in proprietary shares who are not holding securities for their clients. 28.1.2.5.2(c). Registration of each branch office; 28.1.2.5.2(d). At least one trained and registered salesman at each registered branch office. All salesmen of the applicant shall apply for registration as a salesman under SRC Rule 28.1.5; 28.1.2.5.2(e). At least one registered Associated Person. Any person with supervisory responsibility for the applicant shall apply for registration as an Associated Person under SRC Rule 28.1.5; 28.1.2.5.2(f). A sufficient number of back office staff at the main office of the applicant; 28.1.2.5.2(g). A computerized and effective recording and accounting system; 28.1.2.5.2(h). Separate bank accounts for client funds; 28.1.2.5.2(i). Separate bank accounts for proprietary funds; 28.1.2.5.2(j). Reporting, using SEC Form 28-BDA of changes in the information provided in the application form to the Commission in writing within seven (7) days of such changes; 28.1.2.5.2(k). Compliance with the provisions of the Revised Code of Corporate Governance and Anti Money Laundering Act, as amended; 28.1.2.5.2(l). Filing of reports required under the rules and regulations, including but not limited to the filing of the Revised Manuals on Good Governance and Anti-Money Laundering; 28.1.2.5.2(m). A certificate of Membership in good standing from a duly-accredited or recognized broker/dealer association; and 28.1.2.5.2(n). A Broker Dealer must have a website which shall contain basic information about the firm including the services offered, the names, current photos and contact details of its directors, principal officers, associated persons and salesmen. This requirement must be complied with by the firm within six (6) months from effectivity of these rules. The website shall be kept current and updated at all times. 28.1.2.5.2(o). A Broker Dealer shall submit to the Commission and the SRO which has authority to supervise its trading participants a list of its directors, officers, salesmen and employees together with their respective photos taken within six (6) months before submission to the Commission, designations and specimen signatures. For initial compliance, the Broker Dealer shall submit such requirements within six (6) months from the effectivity of these rules. These requirements shall be updated every three (3) years thereafter. 28.1.2.5.2(p). The Commission may require Broker Dealers to subject their information technology, trading, business continuity, disaster recovery and risk management systems to a regular review and audit by independent firm at least once every three (3) years and such other frequency that the Commission may deem necessary. The Commission may also require that the results of said review and audit shall be submitted to the Commission; 28.1.2.5.2(q). Such other requirements which the Commission may prescribe. 28.1.2.6. Perpetual License of Broker Dealer The registration of Broker Dealer license shall remain valid unless otherwise revoked for cause or suspended or voluntarily surrendered by the Broker Dealer, subject to the Broker Dealers' compliance with the qualification and monitoring requirements of the Commission. Each registered Broker Dealer shall pay the annual fee every November of each year of registration. The filing and payment of the required annual fee after the prescribed period shall be subject to a penalty that shall be determined by the Commission. Failure to pay the annual fee shall, after notice and hearing, result in the suspension or revocation of the license, as the circumstances may warrant. 28.1.3. Registration of Successor to Broker Dealer 28.1.3.1. No sale or transfer of assets and liabilities of an existing Broker Dealer (hereinafter referred to as "predecessor Broker Dealer") to an entity (hereinafter referred to as "successor Broker Dealer") or any form of reorganization or change in management of a Broker Dealer, de facto or otherwise shall be effected without prior approval by the Commission. The successor Broker Dealer, with conformity of the predecessor Broker Dealer, shall file a request for such approval. In the evaluation of the request of the predecessor Broker Dealer, the Commission shall determine the eligibility of the successor entity for registration as broker dealer. After securing the aforementioned approval of the Commission, the successor Broker Dealer shall file its application for registration within (30) business days from the date of receipt of notice of approval and simultaneously publish at its expense a notice of such application in any national newspaper of general circulation. In the event that the successor Broker Dealer succeeds to and continues the business of the predecessor Broker Dealer without filing an application for registration, both the predecessor and successor Broker Dealer shall be subject to corresponding administrative penalty as may be determined by the Commission. 28.1.3.2. The following are examples of the types of reorganizations that require the successor of a Broker Dealer to file a new application: 28.13.2.1. A person or entity purchases or assumes substantially all of the assets and liabilities of a Broker Dealer, and, after so doing, the said entity decides to operate the business of the Broker Dealer; 28.1.3.2.2. If two or more registered Broker Dealers consolidate their firms and conduct their business through a new entity which assumes substantially all of the assets and liabilities of the predecessor broker dealer the new entity shall file a complete application on SEC Form 28-BD, while the predecessor firms shall each be required to file a Request for Withdrawal of Business and/or Cancellation of Registration as Broker Dealer under SRC Rule 28.1.4. 28.1.3.2.3. A person or group of persons representing the same interest or acting in concert invests in the Broker Dealer, where such investment results in a change in the management and/or ownership control of the Broker Dealer. 28.1.3.3. Notwithstanding SRC Rule 28.1.3.1, the successor may file an amendment to the registration of the predecessor Broker Dealer on SEC Form 28-BDA instead of an original application for registration, within thirty (30) days after the succession in the following instances: 28.1.3.3.1. A corporate reorganization or restructuring that does not result in a change in control of the Broker Dealer. 28.1.3.3.2. A succession resulting from a change in the form of business, such as from a partnership to a corporation. 28.1.4. Withdrawal of Business and/or Cancellation of Registration as Broker Dealer 28.1.4.1. The Request for Withdrawal of Business and/or Cancellation of Registration as a Broker Dealer shall be filed on SEC Form 28-BDW in accordance with the instructions contained therein. 28.1.4.2. A request to withdraw business and/or cancel registration filed by a Broker Dealer shall become effective on such date as determined by the Commission for its effectivity. If there is no date indicated, the withdrawal or cancellation shall take effect on the date of the issuance of the Order. 28.1.4.3. Subsequent to filing of such Notice or Request to withdraw business and/or cancel registration, the Broker Dealer shall perform the following: 28.1.4.3.1. Publication in at least two (2) national newspapers of general circulation of the notice of the filing of request to withdraw business and/or cancel registration with the Commission and/or the SRO; and 28.1.4.3.2. Execution within five (5) days of a sworn statement, undertaking to comply with the following conditions: 28.1.4.3.2.1. The company will cease to solicit new business and that should the company remain inoperative for five (5) years, its Certificate of Incorporation will be revoked; 28.1.4.3.2.2. The company will no longer execute orders from clients within five (5) days from actual cessation of operation; 28.1.4.3.2.3. The terms and conditions of the Surety Bond shall remain effective until its expiration; 28.1.4.3.2.4. There will be no disposal or transfer of clients' securities to a successor Broker without the prior written agreement or confirmation of the client. The Broker Dealer shall provide the client a template for its agreement or confirmation of the disposal or transfer. The Broker Dealer shall submit to the Commission and/or the Self-Regulatory Organization ("SRO") proof of mailing or transmittal, whether through personal service or a reputable commercial courier, or through online submission as the Commission may prescribe, of the agreement or confirmation. The Broker Dealer shall notify the Commission if the client accepted or rejected the agreement or confirmation. 28.1.4.3.2.5. The company will continually inform the client of its corporate activities until the transfer to successor broker; 28.1.4.3.2.6. The company will preserve for a period of not less than five (5) years from the date the Commission and/or the SRO has approved its operation to cease, all records required to be maintained pursuant to the Books and Records Rule. The company shall inform the SRO and the Commission of the names and residence addresses and contact numbers of at least two (2) person/s responsible for the safekeeping of all the records, reporting any change in the person/s responsible, if there is any. If money laundering, criminal or administrative cases have been filed in court or an investigation is being conducted wherein the customer is involved or impleaded as a party to the case or investigation, the file must be retained beyond the five (5) year period until it is confirmed that the case has been finally been resolved or terminated by the court; 28.1.4.3.2.7. It shall be the responsibility of the Compliance Officer or Associated Person to oversee compliance with the requirements of the Commission and/or the SRO relative to the closure of its business; 28.1.4.3.3. Following the submission of SEC Form 28-BDW Notice of Withdrawal from Registration, the Broker Dealer shall be given a maximum of forty five (45) business days to effect the transfer of its clients' securities to the successor Broker duly approved by the SRO (in the case of Exchange Trading Participants) or the Commission (in the case of Non-Exchange Broker Dealer) or any broker chosen by the client. During such period the following requirements shall be complied with: 28.1.4.3.3.1. Submit to the SRO (in the case of Exchange Trading Participants) or the Commission (in the case of Non-Exchange Broker Dealer) for its approval a draft letter informing the clients of the closure of business including the procedures that it will undertake to service the clients and the creditors; 28.1.4.3.3.2. Issue latest statement of accounts to individual clients to give them the opportunity to validate their securities' positions with the company including their payables; 28.1.4.3.3.3. Submit to the SRO (in the case of Exchange Trading Participants) or the Commission (in the case of Non-Exchange Broker Dealer) a summary of clients' account balances; 28.1.4.3.3.4. Execute clients' instructions on how to effect transfer/liquidate their securities and cash positions; 28.1.4.3.3.5. Provide the SRO (in the case of Exchange Trading Participants) or the Commission (in the case of Non-Exchange Broker Dealer) with a status report of clients' complaints with the corresponding actions taken; and 28.1.4.3.3.6. Submit to the SRO (in the case of Exchange Trading Participants), copy furnished the Commission, or the Commission (in the case of Non-Exchange Broker Dealer) an undertaking to be accomplished by the persons responsible for the safekeeping of all the records of the company pursuant to AMLA and SRC's IRR; and 28.1.4.3.3.7. Submit an affidavit of publication with a copy of the notice that was published regarding the application for the Withdrawal of Business and/or Cancellation of Registration as a Broker Dealer in accordance with SRC Rule 28.1.4.3.9. 28.1.4.3.4. The SRO tasked to perform the independent audit, surveillance and/or compliance functions of the Broker Dealers (in case of Exchange Trading Participants) or the Commission (in the case of Non-Exchange Broker Dealer), if it deems necessary, will conduct a post audit of the company to ensure compliance with the aforementioned requirements after the end of the forty five (45) day period. 28.1.4.3.5. After effecting the transfer of clients' securities to the successor broker duly approved by the SRO (in the case of Exchange Trading Participants) or the Commission (in the case of Non-Exchange Broker Dealers) or any broker of their choice, the company is required to submit to the Commission the following documents: 28.1.4.3.5.1. A list, executed under oath, of all transfers of customer accounts from the time notice of cessation of business or withdrawal of registration has been communicated to the Commission or the SRO; 28.1.4.3.5.2. Certificate of Good Standing from the Commission; 28.1.4.3.5.3. Clearance from the SRO that the company has no outstanding liabilities to the SRO; 28.1.4.3.5.4. Clearance from the SRO tasked to perform the independent audit, surveillance and/or compliance functions that the company can settle or has settled all of its trading related liabilities and obligations prior to the date of effectivity of the termination of operations; 28.1.4.3.5.5. Clearance from the registered clearing agency that all obligations have been settled, delivered and/or securities intact and in good control location; 28.1.4.3.5.6. Current original licenses of the Broker Dealer, salespersons and its Associated Person; and 28.1.4.3.5.7. Filing of SEC Form 28-T for each of the company's Associated Person/s and salesperson/s. 28.1.4.3.5.8. Notwithstanding, the filing of the notice of cessation of operation with the Commission, the liabilities and obligations of the company to third parties shall continue until full compliance with and submission of the abovementioned conditions/requirements. Furthermore, the primary license of the company will be cancelled/revoked should it remain non-operational for five (5) years pursuant to Section 22 of the Corporation Code. 28.1.5. Registration of Salesmen and Associated Persons of Brokers Dealers 28.1.5.1. A person may not be employed as a salesman or associated person of a Broker Dealer or Issuer of proprietary or non-proprietary securities unless registered as a salesman or Associated Person under this Rule. The Broker Dealer/Issuer may be allowed to employ trainees for a one-time, non-extendible period of six (6) months; Provided however that: 28.1.5.1.1. The trainees are supervised by a registered salesman; 28.1.5.1.2. The trainees are not soliciting clients or dealing directly with clients; 28.1.5.1.3. The trainees are not receiving any form of commission or salary from the Broker Dealer other than a reasonable allowance; and 28.1.5.1.4. The Broker Dealer immediately informs the Commission in writing of the hiring of such trainees. The Commission shall consider the attendant conditions to warrant the determination of compliance with the above requirements. 28.1.5.2. For purposes of this Rule: 28.1.5.2.1. Salesman shall refer to a natural person hired to buy and sell securities on a salary or commission basis properly endorsed to the Commission by the employing Broker Dealer. It shall also include any employee of an issuer company whose compensation is determined directly or indirectly on sales of the issuer's securities. 28.1.5.2.2. Associated person shall mean any person employed full time by the Broker Dealer whose responsibilities include internal control supervision of other employees, agents, salesmen, officers, directors, clerks and stockholders of such Broker Dealer for compliance with the Code and rules and regulations adopted thereunder. He cannot perform other duties without Commission approval and subject to the condition that the broker dealer will maintain the appropriate Chinese Wall between the functions of an associated person and that of his other duties. 28.1.5.3. Notice of discontinuation of employment of a salesman or Associated Person and the reasons therefore, shall be provided to the Commission by the employing Broker Dealer by filing SEC Form 28-T and surrendering to the Commission the original registration certificate of such salesman or associated person, no later than five (5) business days after the discontinuation of employment. 28.1.5.4. Requirements for Registration Every application for registration as a salesman or associated person shall be filed on SEC Form 28-S, or SEC Form 28-AP, respectively, verified under oath by the Broker Dealer who is the employer of the salesman or associated person, be accompanied by the prescribed fee and the following papers and documents: 28.1.5.4.1. If an applicant is a foreigner, certified true copy of valid work permit duly issued by the Department of Labor and Employment (DOLE) or any appropriate agency; 28.1.5.4.2. Copies of identity cards/passports of applicant; 28.1.5.4.3. Evidence, preferably a certified true copy, that such person has complied with applicable examination requirements and/or meets other educational, professional or technical qualifications; and 28.1.5.4.4. Written evidence that a Broker Dealer has agreed to employ such person contingent upon such person's registration as a salesman or Associated Person. 28.1.5.5. Terms and Conditions for Applicants for Registration 28.1.5.5.1. Only natural persons can apply and be employed by a Broker Dealer. 28.1.5.5.2. Applicants for salesmen shall be at least eighteen (18) years of age and applicants for Associated Person shall be at least twenty one (21) years of age. 28.1.5.5.3. Applicants for registration as a salesman must have no disciplinary history that would subject them to disqualification from registration under Section 29 of the Code. 28.1.5.5.4. Applicants for registration as an Associated Person, must not have been censured or reprimanded by a professional (e.g., IBP, PRC, etc.), or regulatory body (e.g., SEC, BSP, IC, etc.) for negligence, incompetence or mismanagement, or dismissed or requested to resign from any position or office for negligence, incompetence or mismanagement, or be subject to any other disqualification under Section 29 of the Code. CScaDH 28.1.5.5.5. Any applicant applying for registration as a salesman or Associated Person for the first time, must have taken and passed the applicable examination within the last three (3) years immediately preceding the date of his application. 28.1.5.5.5.1. No applicant for registration as salesman or Associated Person shall be registered unless he has completed the certification requirements of the Commission. 28.1.5.5.5.2. An applicant who is not registered as a salesman or associated person for three (3) consecutive years or more, which shall be counted from the date of expiration or termination of his registration or from the date of his passing of relevant examinations, cannot apply for registration unless he has complied with the certification requirements of the Commission. 28.1.5.5.5.3. An applicant who is covered under subsection 28.1.5.5.5.2 above may not be required to take the earlier referred examination if he can prove to the Commission that he has continuously worked in an equivalent capacity in the local capital market or its related industries for the last three (3) years. 28.1.5.6. The registration of a salesman or Associated Person shall cease when he is no longer employed by the Broker Dealer identified in his registration application. 28.1.5.7. Duties of an Associated Person. Taken in conjunction with SRC Rule 30.2.6, an Associated Person shall: 28.1.5.7.1. Have a general knowledge of the operations of the Broker Dealer without necessarily engaging or actively participating in the day-to-day operations of the firm; 28.1.5.7.2. Supervise and provide trainings as prescribed under SRC Rule 30.2.7 to stockholders, directors, officers, salesmen, other employees, agents, and authorized clerks of the Broker Dealer for compliance with the Code and these Rules; 28.1.5.7.3. Oversee compliance with legislative and other regulatory requirements (such as notifying the Commission of material changes in information previously filed, maintaining registers, books of accounts and other records, compliance with rules, orders and laws relating to trading, issuing confirmation receipts, compliance with margin rules, net capital and other financial requirements); 28.1.5.7.4. Ensure that all salesmen of the Broker Dealer are registered and that the Commission is notified when any salesman is no longer employed by the Broker Dealer; 28.1.5.7.4. * Develop procedures and monitor on a daily basis compliance with financial resource requirements; and 28.1.5.7.5. Ensure that there is an audit trail which enables compliance with applicable laws, Exchange, Clearing Agency and other SRO rules. 28.1.5.8. Conditions for Continuing Registration As a condition for continuing registration, registered salesmen and Associated Persons shall: 28.1.5.8.1. Report any change in the information provided in the application forms and other information that may be required under these rules or orders. Such report must be in SEC Form 28-AMD and filed within seven (7) days from such change. 28.1.5.8.2. Observe at all times the provisions of the Code, these Rules, and applicable Exchange, clearing agency and other SRO rules; and 28.1.5.8.3. Demonstrate an on-going understanding of applicable regulatory requirements and Exchange, clearing agency, and other SRO rules. 28.1.5.9. Every registered salesman or Associated Person who shall change his registration category during the year (i.e., salesman to Associated Person and vice versa) shall be assessed the appropriate fee for the issuance of a new license. 28.1.5.10. Perpetual License For so long as the salesmen and Associated Persons are employed by the Broker Dealer identified in his registration application, their license shall remain valid unless otherwise revoked for cause or suspended or voluntarily surrendered, subject to compliance with the terms and conditions of registration. Each registered salesman or Associated Person shall pay the annual fee every November of each year of registration, and must be cleared of all derogatory reports and cases by the Commission and/or any duly recognized professional or regulatory body or, in appropriate cases, the SRO. The filing and payment of the annual fee after the prescribed period will be charged a fee for late filing. Failure to pay the required annual fees is a ground to suspend registration. 28.1.5.11. Rules in Case of Absence or Lack of Associated Persons Should an Associated Person file an application for vacation leave or takes leave of absence due to emergency, health, and other personal reasons, the Broker Dealer shall notify the Commission in writing on or before the first day the vacation leave or leave of absence takes effect. The same notice requirement applies in case of resignation of an Associated Person wherein the Broker Dealer is unable to find a replacement who can and shall assume office on or before the date of effectivity of said resignation. In case the Associated Person resigns, the Broker Dealer shall immediately appoint a replacement within a period not exceeding one (1) month from the date of filing of resignation, or from the effectivity of the resignation in case the Associated Person resigns without prior notice. In the event that the Broker Dealer will not be able to appoint a replacement within the one (1)-month period or if the replacement appointed/to be appointed cannot yet assume office within the said period, the Broker Dealer shall secure an exemptive relief from the Commission. In case the Associated Person takes a leave of absence for a period exceeding three (3) months which will result in the Broker Dealer not having an Associated Person during the said period, the Broker Dealer shall secure an exemptive relief from the Commission within two (2) days from the time of the approval of such leave of absence, or from the time of knowledge thereof by the Broker Dealer, if prior approval is not applicable. In all instances of absence or lack of Associated Person, it shall be the responsibility and accountability of the board of directors to immediately appoint a competent person to perform the functions of an Associated Person subject to the following conditions: 28.1.5.11.1. The company's President shall take full accountability and responsibility in the event of violations or non-compliance committed at the time the Broker Dealer has no Associated Person or the Associated Person was absent even as the appointed competent person performs the activities required and expected of an Associated Person. 28.1.5.11.2. The company shall be willing to be subject to a monthly audit to be conducted by the SRO and pay audit fee as may be imposed by the SRO. (SEC Resolution #562 Series of 2012) 28.1.6. Broker Dealer Surety Bond and Self Insurance Bond The surety bonds required to be filed pursuant to SRC Rule 28.1.2.5 by Broker Dealers who have been allowed by the Commission to defer compliance with the One Hundred Million (PhP100,000,000.00) unimpaired paid up capital requirements pursuant to that Rule shall be not less than Ten Million Pesos (PhP10,000,000.00) for Brokers and not less than Two Million Pesos (PhP2,000,000.00) for Dealers, or such other amount as the Commission shall prescribe. Such bonds shall be conditioned upon the faithful compliance with the provisions of the Code and rules and regulations adopted thereunder by said Broker Dealer and by all salesmen and Associated Persons while acting for it. Such bond shall be executed by a surety company authorized to do business in the Philippines and duly accredited as a surety company pursuant to the Commission's Guidelines on Accreditation as a Surety Company. In lieu of such bond, the Broker Dealer may file bonds of the Government of the Philippines. If a bond is filed, any person damaged by the failure of such Broker Dealer or of any salesman or Associated Person while acting for it, to comply with the provisions of the Code and these Rules shall be entitled to sue the sureties under such bond and to recover the damages so suffered thereunder. If other securities are filed in lieu thereof, such person may subject such securities to the payment of such damage. The Commission shall file the claim or call on the surety on behalf of claimants. 28.1.7. Compliance with New Requirements Any registered Broker Dealer operating prior to the effectivity of these Rules shall, within ninety (90) calendar days from these Rules' effectivity, comply with all the requirements provided under these Rules that are not otherwise included in its original registration. Nothing in this Rule shall be construed as precluding the Commission from requiring an applicant for registration or a registered Broker Dealer, Salesman, Associated Person to submit other requirements it may deem reasonably necessary to effectively regulate and supervise these persons and/or to protect the interest of the investing public.

Rule 28

10 Every person registered pursuant to this Section shall file with the Commission, in such form as the Commission shall prescribe, information necessary to keep the application for registration current and accurate, including in the case of a broker or dealer changes in salesmen, associated persons and owners thereof.